Tags: UPS | US | Economy

UPS: ‘Subpar’ US Economy May Drag Through End of 2012

Friday, 16 Sep 2011 07:35 AM

United Parcel Service Inc., the package-delivery company whose shipments make it an economic bellwether, said U.S. stagnation may persist through 2012.

UPS expects “subpar growth” in the world’s largest economy until the end of next year, Chief Financial Officer Kurt Kuehn said today at an investor conference in Louisville, Kentucky. While no improvement is in sight now, the economy is “not getting worse,” he said.

Goods moved on UPS trucks and planes range from financial documents to pharmaceuticals. Average daily U.S. package volume was little changed in the second quarter, inching up 0.1 percent, and Atlanta-based UPS said in July that the U.S. economy would be “sluggish” this quarter.

“There’s risk for a double-dip recession, but I’d say it’s unlikely,” Chief Executive Officer Scott Davis said later at a briefing for reporters. “The odds are higher than they were six months ago, but I don’t expect it.”

UPS reiterated today that adjusted 2011 earnings would be in a range of $4.15 to $4.40 a share, while forecasting profit on that basis of $6.90 to $8.60 by 2016 as the U.S. economy strengthens.

Revenue by 2016 will be $72 billion to $79 billion, according to UPS, the world’s largest package-delivery company. That would be an improvement from 2010’s $49.5 billion. UPS said its forecast assumes annual expansion in U.S. gross domestic product of 2.5 percent to 3.5 percent from 2013 to 2016.

‘More Normal’

“Hopefully, a lot of things have bottomed out, real estate being one,” Kuehn said at the briefing. “We see a slowly rising economy in 2012 and hopefully back up to more normal trend growth starting in 2013.”

UPS also said it plans to spend about $200 million to expand its hub in Cologne, Germany, increasing hourly sorting capacity by about 70 percent to 190,000 packages by the end of 2013. The project will add as many as 200 jobs by that year and will be the company’s largest facility investment outside the U.S., UPS said.

Share repurchases will total at least $8 billion from 2012 to 2014, UPS said. The company also boosted planned buybacks for 2011 by 35 percent to $2.7 billion.

UPS rose 2 cents to $66.18 at 4:01 p.m. in New York Stock Exchange composite trading. The shares have declined 8.8 percent this year. That was the third-worst performance among 20 companies in the Dow Jones Transportation Average, which gained 1.4 percent as it advanced for a third straight day.

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United Parcel Service Inc., the package-delivery company whose shipments make it an economic bellwether, said U.S. stagnation may persist through 2012. UPS expects subpar growth in the world s largest economy until the end of next year, Chief Financial Officer Kurt Kuehn...
UPS,US,Economy
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2011-35-16
Friday, 16 Sep 2011 07:35 AM
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